It seems to me that this is a pretty innovative and effective way of providing emergency power. The Prius engine only needs to run intermittently, so gas consumption, noise and pollution is minimized. You already own and use the Prius regularly for normal activities, so no special storage requirements are maintenance are necessary to be ready for use in an emergency.

1,000W seems like it isn't enough to power essential systems. But I can't think of any reason why you couldn't hook-up a 2000W or even 3000W inverter to the battery. The auxiliary battery is rated 60Hr reserve at the standard 25A/Hr rate, which in my case would provide about 2 hours of power to the essential systems in my home (2 fridges, oil boiler/pump, TV, Phone, Internet, computers, cell phones, limited lighting).

I'm still not sure its worth spending the extra $10K to get a hybrid versus an equivalent-size gasoline-only econo-car. But it is another advantage to throw on the balance beam.